Demand and Supply of Labor by Firm A Output MPL Scenario 2 No. of Workers W ME 0 0 1 20 20 250 250 2 50 30 300 350 3 75 25 350 450 4 95 20 400 550 5 110 15 450 650 6 120 10 500 750 1. Firm A above is an example of? Operfectly competitive seller of its output monopolistic seller of its output 2. Firm A in wage scenario 1 is a? O perfectly competitive buyer of labor monopsonistic buyer of labor 3. In wage Scenario 1, how many workers should Firm A hire to maximize its profits? MRPL MR=20 400 600 500 400 300 200 Scenario 1 w = ME 400 400 400 400 400 400

Demand and Supply of Labor by Firm A Output MPL Scenario 2 No. of Workers W ME 0 0 1 20 20 250 250 2 50 30 300 350 3 75 25 350 450 4 95 20 400 550 5 110 15 450 650 6 120 10 500 750 1. Firm A above is an example of? Operfectly competitive seller of its output monopolistic seller of its output 2. Firm A in wage scenario 1 is a? O perfectly competitive buyer of labor monopsonistic buyer of labor 3. In wage Scenario 1, how many workers should Firm A hire to maximize its profits? MRPL MR=20 400 600 500 400 300 200 Scenario 1 w = ME 400 400 400 400 400 400

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The table below shows a firm that is perfectly competitive in both the labor and product markets, showing how much daily output a firm can produce using various numbers of workers. Number of Workers 1 2 3 4 5 6 Output O $2 O $460 O $115 O $100 O $40 3 9 16 21 23 24 If output sells for $20/unit, what is the marginal revenue product of the 5th worker?
Policymakers sometimes propose laws requiringfirms to give workers certain fringe benefits, such ashealth insurance or paid parental leave. Let’s considerthe effects of such a policy on the labor market.a. Suppose that a law required firms to give eachworker $3 of fringe benefits for every hour that theworker is employed by the firm. How does this lawaffect the marginal profit that a firm earns from eachworker at a given cash wage? How does the lawaffect the demand curve for labor? Draw your answeron a graph with the cash wage on the vertical axis.b. If there is no change in labor supply, how wouldthis law affect employment and wages?c. Why might the labor-supply curve shift inresponse to this law? Would this shift in laborsupply raise or lower the impact of the law onwages and employment?d. As discussed in Chapter 6, minimum-wage lawskeep the wages of some workers, particularlythe unskilled and inexperienced, above theequilibrium level. What effect would a fringebenefit mandate have…
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